KEY POINTS:
New Zealand bank customers pay higher fees on personal accounts than those in the United Kingdom and Canada, according to a new study.
The Fujitsu Consulting study shows New Zealanders pay an average of $111 a year for transactions on day-to-day personal accounts.
But bank customers in the UK pay more than 10 per cent less at $98. Canadian banks also come out cheaper at $103.
Experts blame the lack of regulation on banking fees, but authorities say they have no plans to tighten the rules. Customers wanting to complain about high fees have few places to turn, with the Banking Ombudsman, Liz Brown, saying it is out of her control.
"Banking in New Zealand, while not highly regulated, is competitive."
Only Australians are charged more by their banks for the service out of four Commonwealth countries surveyed in January, at $130.
Consumers' Institute chief executive David Russell encouraged unhappy customers to shop around.
When it came to credit cards and mortgages, New Zealanders also paid more in fees than British and Canadian bank customers - but less than Australians.
The study showed withdrawals from automatic tellers overseas and going into overdraft were particularly pricey on personal accounts in New Zealand, compared with the UK and Canada.
Mortgage application and account keeping fees were also higher here than in the other two countries.
On credit cards, going over the limit and foreign transactions were found to be especially expensive.
Fujitsu Consulting executive general manager Martin North pointed to tighter regulation in the UK as the cause of the lower fees there.
He said tougher regulation here was needed - on top of competition - for fees to be driven lower.
"Will the market actually drive fees down sufficiently fast or do you need more regulatory intervention?" he said.
"My suspicion is you do probably need regulators to be more active in terms of giving consumers a fair go when it comes to fees."
Banks approached for comment were reluctant to discuss why the fees were higher in New Zealand.
BNZ spokeswoman Brenda Newth said fees were set on a "basis of cost recovery for the delivery of service" and said Credit Contracts and Consumer Finance regulations affected some of them.
Kiwibank spokesman Bruce Thompson said customers in the UK were warming to fee "packaged" bank products despite the offer of "transactional free banking" for 20 years.
"There has over the last 12 to 18 months been a shift to packaged products which include preferential interest rates on other products and insurances and cost anything from £10 to £15 a month," he said.
The UK had higher penalty fees, he said.
David Chaston, publisher of www.interest.co.nz, said New Zealand's big banks, such as BNZ, ANZ and ASB, earned upwards of $250 million a year in commercial and personal banking fees. Westpac topped Mr Chaston's scale, earning $441 million in the year to September from fees.
Associate Professor Richard Brookes of Auckland University's Business School said fees as low as a few dollars could upset customers. "They get the feeling that every time they go to a bank they are charged," said the marketing specialist.
He said the promotion of Kiwibank and TSB as New Zealand alternatives could lead some customers to question the value of their Australian-owned bank.
Roy Morgan NZ finance sector director Leslie Morton said hefty mortgage interest costs pushed up banking expenses in New Zealand.
"Not only are the domestic rates high in comparison to markets such as US, UK and Australia," he said, "but our comparatively high debt in home loans all conspire to lift the total cost of banking for a Kiwi customer higher than their American, British and Australian counterparts."
About 10 per cent of the written complaints to the Office of the Banking Ombudsman annually relate to fees.
But most were referred back to banks because the office could not rule on them.
"I can't look at a complaint that is purely about the level of fees," said Mrs Brown.
The Bank Customers Action Collective reported receiving one complaint a week from bank customers claiming they had been overcharged.
However, despite the higher fees, experts agreed personal banking fees were dropping.
Massey University Centre for Banking Studies director David Tripe said fees had been reduced because they caused customer "aggravation".
KPMG partner Godfrey Boyce said more "fixed fee" accounts were offered now, trimming the higher fees seen in the mid-90s. "There's been more and more studies that have highlighted the two key factors that tend to push customers to switching are service levels and the level of fees," he said. "If you pile too many fees on, it can become counter-productive."
Commerce Commission spokeswoman Kate Camp said credit card late fees were being examined following moves by the UK Office of Fair Trading to crack down on the fees. "If we considered they were not reasonable, we could take court action."
She said finance industry fees and charges were a priority area for enforcement.
"The commission has ongoing action against many major banks and financial institutions about undisclosed foreign exchange fees - almost $20 million has been paid by banks in refunds to date."
Hidden trap behind cash advances
Getting a $20 cash advance on her credit card ended up being unexpectedly costly for Cristy Jones.
A month filled with birthdays and weddings - on top of paying a mortgage and renovating her house - left Ms Jones short on cash this year.
She took out the $20 on her ASB credit card.
However, after paying several hundred dollars off the Visa about a week later, Ms Jones was shocked to find she was still paying interest on the cash advance.
She called the bank and discovered she would be paying the extra interest until the card's balance was paid off in full.
"As far as they're concerned that $20 goes on to the end," said Ms Jones.
"If I'd been made aware of it, I definitely wouldn't have withdrawn $20 - it wasn't worth it."
ASB spokeswoman Debby Bell said the bank's policy had been correctly applied.
She said if previous statements had not been paid off in full, payments would reduce the balance already incurring interest.
Ms Jones was not alone in her frustration about bank fees.
Online message boards are packed with customers complaining about bank fees.
One, whose bank changed conditions on her account, wrote: "I misunderstood the changes they made. I got smacked with $64 bank fees ... Ouch."
